Black Dragon recently announced the initiation of a project to capture production from associated gas on oil wells, and from existing gas wells. There could be in excess of 200 currently producing oil wells outfitted for dual production in this manner. The first group of wells has now been connected to capture the gas. The effort will continue in a regularly scheduled program.
Currently, most of Dragon's producing chalk oil wells are producing some gas. There are other non-associated gas wells that have been inactive. The project has begun to identify a work program to bring these existing gas producers on line and connected to the pipeline.
Meanwhile new wells on new leases at deeper depths are being planned. These actions will increase company revenue and add shareholder value. Management believes that gas production can be as high as 9 mmscf per month, which could contribute around $30,000.00 per month in gross revenue. The cost to ramp up production could be as high as $150,000.00, but the project, together with higher gas prices, now makes it an appropriate time to put resources on this matter.
Considering the existing oil and gas assets, Dragon plans to exploit its full asset value. These actions should enhance market perception and add true value to the hydrocarbon reserves of the company. It was previously reported that a new 640 acre lease was obtained that will add to this value when the first two wells there come on later this year. The newly acquired Haynesville Shale royalty is another potential revenue generator.
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